Transmission Banking: Making it Easy

Transmission banking is evolving, and now is a good time to check it’s working for you.

It’s often such a natural part of business banking that you may not have stopped to think about how your provider approaches payments and the transfer of funds. But new legislation and technological innovation are changing the payments landscape.

What is transmission banking?

Transmission banking refers to the processes of making and receiving payments and managing surplus balances. Your current account forms the foundation for many of these services, including:

payments

receipts

foreign exchange and foreign currency payments

electronic banking – including the reconciliation of transactions and analytics

Traditionally, the management of day-to-day banking was done via a branch. But with increasing digitalisation and decreased use of cash, your transmission banking can largely be managed online – anytime, anywhere.

The scale and complexity of your business will determine the level of relationship support you need. No matter the size of your business, with digitalisation of banking, most of your dealings in relation to your transmission banking will likely be through online channels.

From 13 January 2018, payment transmission will be regulated by the Payment Services Directive 2 (PSD2), EU legislation that aims to protect the consumer and increase pan-European competition and participation in the payments industry not only by banks but also non-banks. This means some third parties will be able to access your information with your permission. While this can help improve efficiency, the increased use of financial technology to facilitate payments means data security is paramount.

“Now is a good time to step back and think about your bank’s role in helping you be more efficient in the way you manage your finances,” says Cathal Nolan, relationship director at Ulster Bank. “Switching transmission banking is not something to be afraid of once you partner with a bank experienced in migrating clearing relationships using a project-management implementation approach. Apart from achieving cost savings, it’s a chance to simplify your banking and make it more secure.”

Are all banks the same in the way they approach transmission banking?

“Yes and no,” says Nolan. “People use branches less nowadays, and with the use of physical cash also reducing, it’s critical to look at your bank’s online capabilities and its approach to innovation. This is where banks differ greatly. The service model is also key so you have experienced points of contact available to you when you need them, leveraging their experience to add value to your business.”

Eight questions to ask your bank

1. “How can you make my banking more efficient?”

“It’s not just about moving money – it’s an opportunity to review and streamline processes,” says Nolan. “Reconciliation and automation of reporting is a good example – this can include receiving automated statements directly into your enterprise resource planning (ERP) system.”

2. “What can you do to help make my banking more secure?”

Traditionally, customers switching banks determined a suitable provider based on product capability. Nowadays, the net is cast wider, with corporates going out to request for tender (RFT), focusing in on:

innovation and technology

security – cybercrime and fraud prevention

IT resilience and business continuity

access to clearing systems offering more choices of payment methods

compliance with regulatory changes such as PSD2

future innovations – for example, digitalisation and open banking

“Banks have dedicated resources helping protect against security threats and they should be able to reassure you about the standards they operate to and inform you about fraud and cyber-security risks,” says Nolan.

3. “What are your plans in respect of innovation?”

“The financial services landscape is ever-changing, and the pace of banking evolution over the past five years has eclipsed the previous 50 years,” says Nolan. “You need to choose a bank with an innovative culture and understand its approach to keeping ahead of the latest technology developments.”

4. “How will you bring these benefits to my attention?”

Seek out a bank that will keep you informed and up to date; for example, through awareness seminars, webinars, email updates, online resources and newsletters.

5. “What other added value do you provide? “

Look for global reach – for instance, whether the bank is part of an international banking network and can assist with cross-border trading with foreign currency accounts and trade finance solutions. Ask whether the bank provides awareness seminars and provides support on other key issues such as fraud.

“Also, experience matters,” says Nolan. “It’s not just about the cost of your transmission banking fees – experienced service delivery managers can identify more efficient and safer ways to conduct your banking.”

6. How will I interact with you?

Most day-to-day interaction is now managed online and via self-service, but access to the right people still matters.

“Ask whether you’re served by a dedicated team of service specialists,” says Nolan. “The chances are you’ll only need to contact them exceptionally, but you need assurance that when you require support, you know who to contact and how to contact them.”

7. What is your service model?

“Service models differ,” says Nolan. “There’s still a lot to be said for having an email address and phone number for your local contact who can help you with more complex queries. You may also want to access a broader product set, for example trade finance or company credit cards, and a full-service bank adds convenience.”

8. What support will you give me in implementing a banking switch?

The process of switching is dependent on the complexity and size of the business. There’s a regulated process for switching direct debits and standing orders within agreed time frames. This process is primarily to assist SMEs in switching banks while ensuring that frequent payments are not disrupted during the transition process.

“For larger businesses, your new bank should support you by developing a structured implementation plan,” says Nolan. “It’s critical to have a carefully planned banking migration that includes controls such as governance, senior sponsorship and go-live time frames with project sponsors within your company and the bank.

“Having a partnership approach with the bank, scheduled implementation calls and following an agreed plan are key enablers to a safe and secure landing.”